Opinion

Taipei or Beijing? "Diplomacy one way, trade the other"?

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On the 80th anniversary of the establishment of diplomatic relations between Taiwan and Honduras, President Tsai Ing-wen emphasised the economic and commercial value of the alliance. Bilateral trade is growing and Honduras has turned the trade deficit with Taiwan into a surplus. It is now the main source of white shrimp. Honduran melon, seafood, beef, coffee and cocoa are favoured by local consumers.

Taiwanese support is manifested on multiple levels: in overcoming the challenges of the pandemic, reconstruction after natural disasters, through donations of medical supplies and exchange of experiences, in women's empowerment programmes, as well as credit to revitalise the Honduran economy. The Honduran Gulf of Fonseca, on the Pacific coast, was the focus of the meeting between former president Juan Orlando Hernández and his counterpart, Tsai. The incoming is one of the best natural harbours in the world and has a port and fishing capacity that the government aspires to enlarge. The construction of a port in Amapala, on Tiger Island in the Pacific, whose waters Honduras shares with El Salvador and Nicaragua, will be fundamental for maritime transport from Asian countries.

Yes, but. Hernández is in trouble. Candidate Asfura has faced money laundering charges, while the outgoing president is accused of links to drug trafficking. His brother was sentenced to life imprisonment for drug trafficking by a New York court, in a trial where the prosecution called Honduras a "narco-state".

REUTERS/FREDY RODRIGUEZ  -   La presidenta electa de Honduras, Xiomara Castro, da un discurso a sus partidarios durante una vigilia frente al congreso hondureño en Tegucigalpa, Honduras, el 22 de enero de 2022

One of the few bargaining chips is the China factor. Honduras remains loyal to Taiwan, but is now seeking to cultivate ties with Beijing, which, in addition to festering with Washington, also promises investment, credits and, crucially, vaccines. Xiomara Castro's proposed change of recognition is therefore not unusual; in recent years, Taiwan's historic allies such as Panama, the Dominican Republic and El Salvador have done so. And while Nicaragua did not go to such extremes, it did agree to a Chinese consortium proposing a Nicaraguan canal to complement, or compete with, the Panama Canal, a move that ultimately proved unsuccessful.

Fourteen countries in the world (plus the Vatican) still recognise Taipei rather than Beijing. Most of them, nine, in Latin America. In Central America: Belize, Guatemala, Honduras and Nicaragua. In the Caribbean: Haiti, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Taiwan has trade representation offices in seven other Latin American countries: Argentina, Brazil, Mexico, Chile, Colombia, Ecuador and Peru.

Since the triumph of the Communists led by Mao Tse-Tung and the retreat of the Nationalists to the island of Formosa in 1949, Taiwan has been considered a renegade province by the People's Republic. Latin America has been and remains a diplomatic battleground between Beijing and Taipei.

In 1972, Taiwan lost its seat at the UN to the communist government, which since then has been China's official representative. That same year, US President Richard Nixon travelled to Beijing. Seven years later, Washington began formal relations with communist China, which, with the rise to power of Deng Xiaoping, opened up its economy and expanded its trade and diplomatic ties. With its "one China" policy, which treats Taiwan as a rogue province, the country does not accept relations with nations that recognise the island.

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Central America and the Caribbean maintained their recognition of the Taiwanese government as the true Chinese government. The anti-communist option of the Central American governments of the time, in the context of the Cold War, allowed the growth of a commercial relationship that Taiwan sought to maintain.

Nicaragua temporarily broke the script in the first stage of Sandinismo (1979-1989) by recognising Beijing in 1985 because of ideological affinities. It resumed relations with Taiwan in 1990, when the Sandinista Front had already handed over power. Yet the relationship remains contradictory: while calling for democracy in its dispute with Beijing, Taipei backs Ortega's repressive regime. The trade balance exceeds $100M.

In South America, Taiwan fared worse. With the exception of Paraguay, all other countries recognised the People's Republic in the 1970s and 1980s. Its foreign minister, Euclides Acevedo, acknowledges that pandemic and vaccine diplomacy has been well used by China. Sometimes, however, "trade goes one way and politics and diplomacy another. Taiwan is a strategic partner of Paraguay as it is of the US, but the times in politics sometimes make things last or change. At the moment, we are committed to Taiwan, but not yet to China, from which we buy more than $3,500M/year.

During a Covid spike in March, Bloomberg reported that "Paraguay's 63-year alliance with Taiwan - forged when both were ruled by right-wing authoritarians - means Asunción can't buy directly from Chinese manufacturers that have supplied vaccines to other Latin American nations. Government officials say they have been approached to switch recognition to Beijing to receive the doses. US Secretary of State Anthony Blinken phoned President Mario Abdo to warn against it...the relationship [between Asunción and Taipei] dates back to the anti-communism of Alfredo Stroessner and Chiang Kai-shek. They never met. Stroessner made a state visit to Taiwan in 1975 accompanied by his private secretary, Abdo's father. Taiwan has showered hundreds of millions of dollars in aid on its ally over the years, but bilateral trade is tiny compared to Paraguay's with its other trading partners".

In April, Taiwanese Foreign Minister Joseph Wu accused China of promising Paraguay millions of doses of Covid as part of "vaccine diplomacy" to persuade Asunción to change its allegiances. The pressure on Abdo's historic Colorado Party government mounted as cases mounted in a second wave and the hospital system overflowed.

"Taiwan's cost" is the price Paraguay pays for its recognition policy. Two of the pillars of Paraguay's economy are its soy and beef exports. China is the world's largest importer of both. In a study published in 2020 in the journal Foreign Policy Analysis, it was estimated that the historical alliance with Taiwan entails losses for Paraguay equivalent to some $350M per year (around 1% of its GDP).

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Taiwan's scholarships for Paraguayan students and business meetings such as this year's "11th Taiwan-Paraguay Joint Conference of Business Councils", which focused on the food sector and green energy, are among the assets. Taiwan highlighted the favourable business climate in Paraguay.

It is a platform created in Brussels to bring together members of the Taiwan Friendship groups in the European Parliament and the parliaments of Germany, France and the United Kingdom. It refers to Taiwan's former name, from the Portuguese ilha Formosa - Beautiful Island. It seeks to forge stronger ties between Taiwan, the EU and like-minded European countries.

May saw the launch of the Formosa Club in the Caribbean, which complements successful chapters in other parts of the world as well as the Formosa Club for Latin American parliamentarians, established last year. It is made up of 67 members of the legislative bodies of Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, Venezuela and Mexico.

In the first virtual summit between Biden and his Chinese counterpart, Xi Jinping, neither side gave in on the thorny issue of Taiwan.

Biden asserted that the US does not encourage Taiwan's independence...it only protects it. His statements do not represent a change in Washington's policy of "strategic ambiguity" on the conflict. Biden reiterated the commitment to the "one China" policy, while specifying that he would also be guided by the Taiwan Relations Act, under which the US supplies military equipment to the island.

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